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How Will Hanesbrands Fare in 1Q?

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The apparel chain Hanesbrands Inc. (HBI - Analyst Report) is set to report its 2013-first quarter results on April 23. In the last reported quarter, the company posted a 6.5% positive surprise. Let’s see how things are shaping up for this announcement.

Growth Factors This Past Quarter

Hanesbrands benefited from continued strong sales, innovations and cost control measures in the previous quarter.

Revenue growth was fuelled by the undergarment categories like Tagless, Comfort Blend and Smart Sizes, which consistently occupy major share in the market. Gross profit expanded due to favorable pricing. Hanesbrands’ focus on the ‘Innovate to Elevate’ strategy is helping the company boost its earnings. The strategy focuses on value added, higher-priced and higher margin items that can be supplied at lower cost.

Earnings Whispers?

Our proven model does not conclusively show that Reynolds American is likely to beat earnings this quarter. That is because a stock needs to have both a positive Zacks Earnings Expected Surprise Prediction (ESP) and a Zacks Rank of #1, 2 or 3 for this to happen (Read: Zacks Earnings ESP: A Better Method). That is not the case here as you will see below.

Zacks ESP: The Most Accurate estimate and the Zacks Consensus Estimate stands at 50 cents. That is a difference of 0.00%.

Zacks Rank #3 (Hold): Reynolds’Zacks Rank #2 (Buy) lowers the predictive power of ESP because the Zacks Rank #2 when combined with a non-positive ESP makes surprise prediction difficult. We caution against stocks with Zacks Rank #4 and #5 (Sell rated stocks) going into the earnings announcement, especially when the company is seeing negative estimate revisions momentum.

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